V.S. Deshpande, J.
(1) Order xxxvii rule 3 Civil Procedure Code read as follows :-
'3. Defendant showing defense on merits to have leave to appear-(1) The Court shall, upon application by the defendant, give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the applcation. (2) Leave to defend may be given unconditionally or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit.'
(2) Rules 3 (1) lays down two sets of circumstances the existence of either of which would entitle the Court to give leave to appear and to defend the suit. The defense must disclose either of these two circumstances, namely, (1) which would make it incumbent on the holder to prove consideration or (2) such other facts as the Court any deem sufficient to support the application. If leave is to be granted for any of the above two reasons it may be either unconditional or conditional. But if any of the above to reasons is not apparent from the defense pleaded by the defendant in the written statement and/or documents on record, then the leave has to be refused. At this stage only the averments of the defendants and other admitted documents on record have to be seen. The averments of the defendant may be assumed to be true unless they are rebutted by other admitted facts on record. At this stage there is no question of appreciation of evidence or believing or disbelieving the averments of the parties.
(3) The suit before the trial judge was based on two documents which are 'hundis' stamped with stamps of Rs. 5 00 each The document are stamped and are dated 12th August, 1972. Bach of them is in favor of the plaintiff for a sum of Rs 10,00000. Each of them is admitted to bear the signatures of the defendant. The plaintiff sues for the recovery of Rs 20,400.00 being the consideration of the 'hundis' namely Rs. 20,000.00 plus interest at Rs. 1.00 per cent per annum. In defense the defendant stated that he had signed blank 'hundis' on the stamp forms. He said that this was as a collateral secuirty for the price of goods which the defendant was buying from a partnership firm of which the plaintiff was a partner. He said that the price was paid up by him to the partnership on 11th August, 1972 and nothing was thereforee due to the plaintiff on the basis of these two 'hundis'. He, thereforee, sought the leave of the Court to appear and defend the suit under Order Xxx Vll rule 2 Code of Civil Procedure
(4) The only question for decision befora the trial court was whether leave should be granted (either unconditional or conditional) or whether it should be refused. As stated above the powers of the trial court in deciding this question had to he exercised solely in accordance with the criteria laid down in Order xxxvii rule3(1) reproduced above. The trial court purported to grant unconditional leave to detend the suit for the following reasons stated in its own words.
'THUS, it will be a case where the pliantiff will be required to prove consideration for the hundis which are alleged to have been signed by the defendant in blank as collateral security for the goods supplied by Messrs. Nav Bharat Conduits to the defendant. thereforee, in any opinion, it is a fit case to grant unconditional leave to the defendant which is accordingly granted '
(5) It will be seen that leave was granted by the trial court solely on the first ground stated in rule 3 (1), namely, that the defense had disclosed facts as would make it incumbent on the holder to prove consideration. The trial court did not make any reference to the alternative rea.son laid down by rule 3 (1), namely, other facts as the court may deem sufficient to support the application.
(6) For the success of this revision application under section 115 Civil Procedure Code, it is necessary for the plaintiff-petitioner to prove that the power of the trial Court in granting the leave was exercised either without jurisdiction or with jurisdiction but illegally or with material irregularity within the meaning of section 115 In Dhulabahi v. State of Madhya Pradesh a series of prepositions were laid down by the Supreme Court in paragraph 32 setting out the circumstances in which the order of a statutory authority maybe impugned in a civil court. In the first preposition it is stated that even if a statute gives finality to the orders of a special tribunal it will not exclude from the jurisdiction of the civil court those cases 'where the provisions of the particular Act have not been complied with.' In paragraph 24, a previous decision of the Court is relied upon to further explain this preposition. In that previous decision it was said that 'non-compliance with the provisions of the statute to which reference is made by the Privy Council must, we think, be non-compliance with such fundamental provisions of the statute as would make the entire proceedings before the appropriate authority illegal and without jurisdiction' A fortiori this preposition would apply to the decision of the Court acting under Order xxxvii rule (3)1 Civil Procedure Code
(7) A defense that the signature of the defendant was made on the blank paper may relate to two kinds of documets, namelv,(1) 'the papers stamped in accordance with the law relating to negotiation of instrumenls within the meaning of section 20 of the Negotiable Instruments Act, 1881; or (2) any other paper. The meaning of execution of a document ordinarily Implies that a person making his signature by way of execution knew or should have known the nature of the document which he was signing. The defendant knew that he was signing a stamped 'hundi' paper. He knew that it was stamped Rs. 5.00 and thereforee the plaintiff could later write words on it which would make the defendant liable for payment of a maximum sum of Rs. 10,000.00. In the present case, thereforee, the execution of these two documents must be taken to have been admitted by the defendant even though we may assume to be true the allegation that the documents were blank when he executed them If a document had been other than a document covered by section 24(1), the defendant may have been able to plead that he did not know the nature of the document which he was signing. Such a plea would be one of manner factum. In that event the defendant might have been able to show by pleading such circumstances as would have made it 'incumbent on the bolder to prove consideration' within the meaning of rule 3(1) of Order xxxvii Code of Civil Procedure. In the present case, however, the pleading of the defendant did not amount to such a pleading. For, section 20 expressly contemplates the signing of a blank stamped document with a view to enable the holder thereof to write ihe words and amount of liability thereon. This provision relates only to a document stamped in accordance with the law relating in Negotiable Instruments Act. Apparently, the legislature made a distinction between such a document and other documents, The presumption that a negotiable instrument is executed for consideration raised by section 118 of the Negotiable Instruments act, 1881 applies to all negotiable instruments. thereforee if a negotiable instrument was not stamped according to law when it was executed, for instance whsa it was a cheque, it would ba possible for the defendant to plead the facts which may make it incumbent holder of such negotiable instrument to prove consideration F.A..O (O.S) 68 of 1969 M/S R.S. Atmaram Suri and sons v. N.K.Textile Mills, decided on 14th of May, 1970 by a Division Bench of this Court (Hardy and Deshpande.,JJ) was.such case. Reliance was placed therein on Santosh Kumar v. Bhai Mool Singh, furthere explained in Milkhtram (India) Private Ltd. v. Chimanlal, The former was a case relating io a cheque the latter was a case relating to a pronoic but in which section 20 of the Negotiable Instruments Act does not seem to have come up for consideration On the other band in J.K.Shaha v. Dulah Meah a Full Bench held that in view of sections 20 and 118 of the Negotiable Instruments Act 1881 the mere allegation in the defense that a promissory cote stamped in accordance with the law relate to negotiable instruments-within the meaning of section 20 was execuled either wholly blank or having written thereon an incomplete negotiable instrument did not amount to the pleadings of facts which would shift the burden of proof from the defandant to the plaintiff. On the contrary it was observed as follows ;-
'EXECUTION of the promissory note itself, once the signature is proved or admilled, shifts the burden to ibe maker. Consideration is presumed in the case of negotiable instruments and need not be proved independently.'
Previous decision were relied upon.
(8) In view ofthe facts that the two stamped 'hundi' papers .were covered by section 20 of the Negotiable Instruments Act, the defendant's plea that he had executed them in blank did aot shift the burden of proof from him to the, plaintiff. The Court could not, thereforee, grant leave to appear and defend to the defendant for the first reason stated in Order xxxvii rule 3(1) Code of Civil Procedure. The finding of the Court to the contrary is, thereforee directly opposed to this fundamental provision of law and was, thereforee, either without jurisdiction or in illegal exercise of jurisdiction within the meaning of section 115 Civil Procedure Code At the court.did not apply its mind to the second reason given in Order xxxvii rule 3(1) the question whether leave could be granted in the present, case for the second cause is still left upon for the decision of the trial court. The revision petition is, thereforee, allowed. The order of the trial court dated 14th December, 1972 is set aside and the application of the defendant for leave to appear and defend the suit is left to be decided by She trial court in the light of the second reason laid down in order xxxvii rule 3(1) Civil Procedure Code The costs of this revision would abide by the result of the suit. Parties are directed to appear before the trial court on 23rd of April, 1973.